Ch. 20: Variable Costing for Management Analysis

Created by k_scott13 

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absorption costing

the reporting of the costs of manufactured products, normally direct materials, direct labor, and factory overhead, as product costs.

contribution margin

sales less (-) variable costs and variable selling and administrative expenses.

contribution margin analysis

the systematic examination of the differences between planned and actual contribution margins.

controllable costs

Costs that can be influenced (increased, decreased, or eliminated) by someone such as a manager or factory worker.

manufacturing margin

the variable cost of goods sold deducted from sales. Sales (-) VC of goods sold.

market segment

a portion of business that can be assigned to a manger for profit responsibility.

non-controllable cost

Cost that can not be influenced (increased, decreased, or eliminated) by someone such as a manager or factory worker.

quantity factor

the effect of a difference in the number of units sold, assuming no change in unit sales price or unit cost.

sales mix

the relative distribution of sales among the various products available for sale.

variable cost of goods sold

consists of direct materials, direct labor, and variable factory overhead for the units sold.

variable costing

the concept that considers the cost of products manufactured to be composed only of those manufacturing costs that increase or decrease as the volume of production rises or falls (direct materials, direct labor, and variable factory overhead).

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